Biggest lift in Singapore gasoline prices in 3 years

Brisbane and Sydney petrol prices surge
Weekly petrol prices

Petrol: According to the Australian Institute of Petroleum, the national average price of unleaded petrol rose by 0.5 cents in the past week to 141.0 cents a litre. Today, retail petrol prices are averaging 152.80 cents a litre in Sydney (up 22.3 cents a litre over the week) and 160.8 cents a litre in Brisbane (up 27.6 cents a litre over the week), according to real-time data from MotorMouth.

Singapore benchmark gasoline price: Last week, the Singapore benchmark gasoline price – the largest component of fuel prices paid by motorists – rose for a fourth consecutive week to US$78.35 a barrel. While that’s the highest level in two months, the weekly increase of US$6.10 was the biggest lift in over three years.

Movements in the petrol price can affect consumer spending, and in turn, prospects for retailers.

What does it all mean?

• Motorists beware! International benchmark gasoline prices rose sharply last week. In fact, the Singapore benchmark gasoline price rose for a fourth consecutive week to US$78.35 a barrel.

• While that’s the highest level in two months, the weekly increase of US$6.10 was the biggest lift since March 13 2016. And in Aussie dollar terms, the Singapore gasoline price rose by $8.99 or 8.7 per cent last week to $111.91 a barrel or 70.39 cents a litre – the biggest weekly increase in dollar terms since September 6 2015.

• But changes in international prices can take around ten days to work their way through the supply chain to metropolitan areas and even longer for regional Australia.

• Global refining margins have lifted due to strengthening gasoline and diesel markets and supply disruptions on the US East Coast.

• Global oil prices rose last week. The Brent crude price rose by 3.9 per cent to US$66.72 a barrel and the US Nymex price rose by 4.7 per cent to US$60.21 a barrel. The majority of the gains occurred on Wednesday with a larger-than-expected fall in US crude stockpiles surprising traders.

• US crude stocks fell by 9.5 million barrels in the week to July 5, shrinking more than the 3.1 million barrel draw analysts had expected as refineries ramped up output according to the EIA.

• Oil prices are also set to begin this week positively after Tropical Storm Barry shut down three-quarters of US Gulf of Mexico production over the weekend.

What do the figures show?

Petrol prices

• According to the Australian Institute of Petroleum, the national average price of unleaded petrol rose by 0.5 cents in the past week to 141.0 cents a litre. The metropolitan price rose by 1.4 cents to 141.3 cents a litre, but the regional price fell by 1.2 cents to 140.1 cents a litre.

• Average unleaded petrol prices across states and territories over the past week were: Sydney (up by 11.9 cents to 140.1 c/l), Melbourne (down by 12.0 cents to 140.2 c/l), Brisbane (up by 9.6 cents to 143.1 c/l), Adelaide (down by 3.7 cents to 145.1 c/l), Perth (up by 0.8 cents to 139.0 c/l), Darwin (down by 1.5 cents to 140.4 c/l), Canberra (down by 0.5 cents to 142.5 c/l) and Hobart (up by 0.1 cent to 151.8 c/l).

• The smoothed gross retail margin for unleaded petrol fell from 15.36 cents a litre to 14.41 cents a litre last week (24-month average: 12 cents a litre).

• The national average diesel petrol price fell by 0.1 cents a litre to 147.8 cents a litre over the week. The metropolitan price fell by 0.1 cents to 146.6 cents a litre and the regional price was flat at 148.8 cents a litre.

• MotorMouth records the following average retail prices for capital cities today: Sydney 152.8c; Melbourne 132.8c; Brisbane 160.8c; Adelaide 131.0c; Perth 130.0c; Canberra 142.2c; Darwin 139.8c; Hobart 151.4c.

• Today, the national average wholesale (terminal gate) unleaded petrol price stands at 130.6 cents a litre, up by 2.4 cents over the week. The terminal gate diesel price stands at 134.3 cents a litre, down by 0.2 cents over the past week.

• Last week, the key Singapore gasoline price rose by US$6.10 or 8.4 per cent to US$78.35 a barrel – the biggest weekly increase in dollar terms since March 13 2016. In Australian dollar terms, the Singapore gasoline price rose by $8.99 or 8.7 per cent last week to $111.91 a barrel or 70.39 cents a litre – the biggest weekly increase in dollar terms since September 6 2015.

What is the importance of the economic data?

• Weekly figures on petrol prices are compiled by ORIMA Research on behalf of the Australian Institute of Petroleum (AIP). National average retail prices are calculated as the weighted average of each State/Territory metropolitan and non-metropolitan retail petrol prices, with the weights based on the number of registered petrol vehicles in each of these regions. AIP data for retail petrol prices is based on available market data supplied by MotorMouth.
What are the implications for interest rates and investors?

• Motorists are likely to experience petrol price pain in the coming weeks if international prices are any guide. Pump prices are already elevated at $1.50-$1.60 a litre in Brisbane and Sydney. But prices are lower elsewhere thanks to the retail petrol price discounting cycle.

• Supply disruptions, geo-political tensions in the Middle East and OPEC-Russian enforced supply cuts combined are supporting crude oil prices.

• But of course, drivers remain captive to petrol price cycles, especially in the larger and more competitive retail fuel markets on the East Coast. Motorists should keep an eye on real-time fuel apps on their smartphones – such as MotorMouth – and look for the best deals in their suburbs and towns.

• The Reserve Bank is expected to assess incoming economic data over the coming months before deciding the next move for the cash rate.

Published by Ryan Felsman, Senior Economist, CommSec